How bricks-and-mortar stores are looking more and more like physical websites

Online giants such as Amazon and eBay have been gleaning information about their customers’ merchandise buying habits for years — and now bricks and mortar retailers are taking a page from their playbook

TORONTO • Online giants such as Amazon and eBay have been gleaning information about their customers’ merchandise browsing and buying habits for years — and now bricks and mortar retailers are taking a page from their playbook.

From in-store cameras that track how long customers pause at store displays to opt-in apps that recognize shoppers’ identities and send an instant coupon to their phones, retailers are keen to discover new avenues of advantage over convenient rival websites, even as they seek to capitalize on their own Web channels and integrate them with bricks and mortar stores.

“They take all of the great attributes of a retailer’s Web analytics — who came to my site, how long did they stay, what did they look at, what didn’t they look at and how did that convert to purchases — and apply them to the physical world,” says Doug Stephens, founder of Toronto-based advisory firm Retail Prophet, which showcased a range of the new digital technologies in the Retail Collective display at Toronto’s recent DX3 conference.

“The store, in essence, is becoming a physical website.”

The emerging technologies allow retailers to observe customers looking at an item in a store and simultaneously determine how many people are using the store’s WiFi network to check Amazon’s price on the same item, for example.

RetailNext, a video analytics firm based in San Francisco, specializes in in-store video tracking of customers and sets up a series of cameras so people’s progress can be monitored as they walk through the space.

The store, in essence, is becoming a physical website

Mr. Stephens said, however, that not all of the technologies are driven by retailers’ attempts to combat showrooming — the practice of looking up prices on items online to find cheaper options. He believes the practice is not always an accurate description of what consumers are doing in stores when they are checking their mobile devices. Research indicates consumers more often start researching items to find out more information rather than looking for an undercut in price.

“We have been conditioned by what we hear from retailers like Walmart and Target to believe that showrooming is caused by price, that consumers are being predatory, and Amazon is out there trying to undercut everyone,” he said.

“We are starting to live in a world now where I’m not very comfortable to spend a night in a hotel room unless I know what other people think about it. And I don’t want to buy a camera unless I know what the online reviews look like.”

Those are issues San Francisco-based Hointer and IQMetrix of Vancouver address in two very different ways.

Hointer, founded by former Amazon executive Nadia Shouraboura and used by Levi stores in the U.S., allows customers who use the company’s mobile app to scan a QR-coded tag on a pair of jeans to find out more information about them. If customers want to try them on, the app sends a notification to the back stockroom to put aside selected sizes and styles. Users can then buy the goods they like immediately though their mobile devices, without waiting to check out at the till.

“It is a very convenient way for a sales associate to work with a customer,” Ms. Shouraboura said, one that would allow smaller stores to optimize limited spaces and keep well-trained sales associates up front rather than working to fold or restock items.

A retailer displaying three toasters, for example, can place a screen close to its housewares space that offers a live Web catalogue showing dozens of other models on offer for easy purchase, pickup and delivery.

Antoine Azar, CEO of Montreal-based ThirdShelf, said online retailers have built up a tailored relationship with their customers over time using technology, remembering wish lists and profiles and searches, and are getting better at making recommendations that are relevant to those customers.

“In the stores, a sales person might not have that relationship with you,” he said. “But now through a branded mobile app you can have a virtual presence for the real world.”

ThirdShelf also helps retailers to meld virtual and physical retail stores with its app, in use at vintage luxury retailer LXR & Co., which has a busy Web business and boutiques in Soho and Beverly Hills.

When customers opt in to the retailer’s proprietary app powered by ThirdShelf, they get a personal staff greeting when they cross the entry threshold of the store and an immediate special offer, such as a discount on items or access to exclusive merchandise.

Handout/IQMetrix

“This becomes the retailer’s loyalty program,” Mr. Azar said. “They can get rid of the plastic cards, the paper punch cards and whatever they are doing online and in-store and they do one unified program on mobile.”

Like many players in the sector, ThirdShelf doesn’t reveal its client list. Neither does U.S.-based Nomi, but its key niche tends to be more contentious with privacy advocates. Using anonymous WiFi tracking, Nomi is not a so-called “opt-in” technology, and picks up WiFi signals from anyone who has it enabled on a cellphone.

It can track a wide variety of information, including how many people enter a store, the percentage of Apple devices in use at any given time relative to other devices, the amount of time they spend in given areas of store and in the store as a whole before leaving.

“We actually don’t mention [partner retailers] publicly because we are putting sensors in the stores anonymously from smartphone signals,” said Paul Maass, director of enterprise sales at Nomi.

“We are working with over 60 customers today. We have a couple of pilots going with well-known retailers in Canada and that number should grow soon.”

As the technologies get tested, businesses are concerned about alienating consumers if they anonymously videotape or track them, Retail Prophet’s Mr. Stephens said.

“A lot of retailers are out there nibbling a little bit at this stuff. My feeling is that right now we are still in the cat and mouse phase with a lot of this stuff — there is a lot of trepidation around it.”

U.S. shopping malls testing the mobile device tracking technology of Path Intelligence reportedly stopped using its systems in 2011 after New York senator Chuck Schumer wrote a letter to the company saying the malls should get consent from mobile owners before tracking their movements.

And Nordstrom stopped using the WiFi customer-tracking technology Euclid last year after it was reported it was in use at 17 stores, though a sign told customers it could opt out by turning off their phones.

“For retailers, it needs to be about whether or not [the technologies] can genuinely improve the customer’s experience,” Mr. Stephens said. “If it is all about fancy metrics on a dashboard for the retailer’s own sake, then there is always going to be consumer pushback. But if consumers really start to get the sense that their experience is a lot better because of them, then like any currency — privacy is just a currency — we have got to be willing to spend it.”